"The COVID shock to the economy has caused disruptions that we'll be working through over the next year," Yellen told CNN's State of the Union. "And, of course, Americans have not seen inflation like we have experienced recently in a long time." Yellen also pushed back on the idea that the U.S. is losing control of inflation.
"As we get back to normal, expect that to end," she added, of the high rates. Yellen noted that supply chain issues and worker shortages are likely to blame for the economic issues, citing health and child care concerns as reasons why "many firms are experiencing a shortage of labor." Regardless, however, she expects the situation to improve as the pandemic clears up and supply chains get back to normal.
"This is temporary pains that result from a COVID economy," the treasury secretary said. "As we get beyond the pandemic, I expect labor supply to increase."
Yellen also said its "utterly essential" that lawmakers raise the U.S. debt ceiling, and reiterated "earlier warnings" about the potentially catastrophic consequences of a default, writes Bloomberg. Congress already passed a temporary measure raising the nation's borrowing limit through Dec. 3, but will need to revisit the issue soon.